Deja vu all over again: Fueling the next housing meltdown

Charles Hugh Smith
Sep 8th 2009 at 4:00PM

Low down payments, risky mortgages guaranteed by government entities, rising defaults — haven’t we been here before? Isn’t this the same mix of easy money and poor risk-management that blew up the housing market in 2007 and 2008?

You’d think the mortgage industry and the federal government would have learned their lesson since the housing bubble’s collapse. But you’d be wrong. Essentially, nothing has changed, except the names of the government-sponsored enterprises.
Freddie Mac and Fannie Mae, the GSEs that fueled the great housing bubble of 2002 to 2007, melted down once a substantial portion of the trillions of dollars of risky mortgages they’d underwritten began defaulting. Now that taxpayer-funded bailouts have footed the bill, Fannie and Freddie are mere shadows of their former freewheeling selves.
Read entire article here.